In a significant judgment in the Jagjit Singh Case, the Supreme Court has ruled that contract workers should get the same pay as permanent workers. It held that denial of equal pay for equal work to daily wagers, temporary, casual and contractual employees amounted to “exploitative enslavement, emerging out of a domineering position”. The court also made the philosophical point that denial of the principle of equal pay for equal work is a violation of human dignity. The verdict came in the context of workers employed by the government.

With this, the constitutional principle of ‘equal pay for equal work’ has been upheld by the Supreme Court with respect to temporary employees’ vis-à-vis permanent employees in the government sector.

Important observations made by the court:

Not paying the same wages, despite the work being the same, is violative of Article 145 of the Constitution of India and amounts to exploitation in a welfare state committed to a socialist pattern of society.

The right of equal wages claimed by temporary employees emerges, inter alia, from Article 397 of the Constitution.

The claim for equal wages would be sustainable where an employee is required to discharge similar duties and responsibilities as permanent employees and the concerned employee possesses the qualifications prescribed for the particular post.

In a claim for equal wages, the duration for which an employee remains or has remained engaged, the manner of selection/appointment etc. would be inconsequential, insofar as the applicability of the principle is concerned.

Based on the principle flowing from Article 38(2) of the Constitution, the Government cannot deny a temporary employee at least the minimum wage being paid to an employee in the corresponding regular cadre, along with dearness allowance and additional dearness allowance, as well as all other benefits which are being extended to casual workers.

The classification of workers (as unskilled, semi-skilled and skilled), doing the same work, into different categories, for payment of wages at different rates is not tenable. Such an act of the employer would amount to exploitation and shall be arbitrary and discriminatory, and therefore, violative of Articles 14 and 16 of the Constitution.

If daily-wage employees can establish that they are performing equal work of equal quality, and that all the other relevant factors are fulfilled, a direction by a court to pay such employees equal wages (from the date of filing the writ petition), would be justified.

Significance of this judgment:

The verdict strikes at the heart of the inequity that characterises the treatment of labour in both the public and private sector, whose defining characteristic is the division of workers into a two-tier caste system of regular and contract workers.

In establishments across the country, an elite minority of permanent workers enjoy relative job security and higher wages, while the vast majority, comprising casual or contract workers, toil under terms where they can be terminated any time without reason, and get paid a fraction of what the regular workers get.

Background:

Contract labour was initially employed only for non-core work such as gardening, cleaning, and maintenance. Soon, they began to be increasingly employed in production as well. Workers protested. In response, the CL Act was enacted. It expressly prohibits the employment of contract labour for perennial work, that is, in core production.

Bu, it is now widely believed that it was the Contract Labour (Regulation and Abolition) Act, 1970 (CL Act), ostensibly enacted to abolish contract labour, that cemented their exploitation by offering a legal operating framework to labour contractors.

Before this legislation, temporary workers and permanent workers could make claims on their employer and negotiate as members of the same union. But the CL Act, by introducing a distinction between an ‘employer’ and a ‘principal employer’, kept the door open for expansion of contractualisation.

What’s the concern now?

Labour contractors easily circumvent the requirement made by CL Act through what have come to be known as ‘sham contracts’. It is a contract that may show a worker as having been hired for a cleaning job. But once he enters the factory premises, he is engaged in production work. There is no documentation to show that a contract worker who, on paper, is engaged for cleaning work, is actually in production.

Why SC verdict would have little impact?

It is being felt that the SC verdict would have an immediate, and positive, bearing on contract workers’ compensation. Unfortunately, this is unlikely to happen, due to the difference between permanent and contract workers in access to collective bargaining.

As per the Trade Unions Act, 1926, any workman who works in a factory can join a union of that factory. But trade unions typically have only permanent workers as members. The reason cited is that contract workers are not employees of the employer in question and so should not find representation in a union body formed for the purpose of negotiating with the said employer.

Contract workers are hired by the labour contractor, who is empanelled with the employer as a supplier of contract labour, and who pays their salaries.

What the law says?

According to experts, not being on the rolls of an employer does not disqualify a contract worker from being a member of a factory’s union. Experts point to section 2 (g) of the Trade Union Act , which defines “workmen”, for the purposes of a trade union, as “all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises”.

But, why are many trade unions reluctant to give membership and voting rights to contract workers?

In an industrial climate extremely hostile to any union activity, workers believe that forming a union that also includes contract workers is bound to provoke the management into even greater hostility.

Managements refuse point blank to discuss with unionists any issues concerning contract workers.

Contract workers are far more insecure compared to regular workers. In an era where companies frequently terminate even a permanent worker for engaging in union mobilisation, the stakes are too high for contract workers, who could be summarily dismissed, without any consequences, by the management.

Also, in many trade unions, permanent workers themselves don’t want to extend union membership to contract workers. Given that permanent workers’ salaries are much higher, economic self-interest militates against the inclusion of contract workers in union membership.

Way ahead:

The SC judgment thus poses an old question to India’s labour movement: how to unionise contract workers, who are in one factory today, in another the next, and whose interests are all too easily played off against those of permanent workers? Unless the labour movement comes up with an answer to this question, legislations and judicial pronouncements may not change things much on the ground.

Overall, the Supreme Court’s judgment in the Jagjit Singh case represents a very small step forward in a narrow area of law that has not reached its full potential in ensuring social welfare of all workers due to the lack of legislative action and the absence of judicial imagination.

Conclusion:

Now, union leaders should focus on securing decent work that guarantees pay parity while in employment. The government must deploy staff with the flexibility they need. A reform in labour laws to readjust the size of the workforce at short notice, hire new skills, scale up or down, depending on way demand moves, will make India competitive.